The original report said adequate controls within the purchasing and accounts payable processes are "vital" but did not exist in 2009, the period under review, when New Orleans paid more than $950 million to vendors. As a result, it said, an opportunity existed "for fraudulent purchases and payments."

The 2011 report noted that a May 2010 audit of city expenditures by the
Louisiana legislative auditor found instances of "payments made for
goods that had not been received as well as payments made for invoices
that lacked proper documentation."

Among the still-uncorrected problems, the new report says, is that the financial systems administrator and the chief accountant continue to have the ability to both enter purchases of goods and services in the city's computerized financial information system, known as AFIN, and to authorize the same purchases. Quatrevaux called that "a serious internal-control deficiency."

In response, Chief Administrative Officer Andy Kopplin said, "No one
is purchasing and receiving goods on their own. The city requires that
more than one person in each department is involved in the approval for
an order, and that more than one person is involved in each department
in the approval of a payment."

The Landrieu administration said in 2011 that the AFIN system was old and outdated and needed to be replaced with a new system known as Enterprise Resource Planning, or ERP. However, the city has yet to develop and install the new system, citing a lack of money.

Failure to install the new system is blamed for some of the other cases in which the city has not carried out the commitments it made in 2011, Quatrevaux said. However, he said, "although a new information system is needed badly, the city could make some of these changes now."

On the plus side, the new report says, the city has added nine new accounting positions, drafted a records retention policy and implemented an electronic contract management system to track contracts and their approval. Also, 94 percent of the city's employees completed the ethics training required by state law. On the other hand, it says, the city still does not verify the legal status of non-contract vendors or determine whether vendors owe delinquent taxes before making payments to them.

Kopplin said the city "has implemented every recommendation that we agreed to, given our current capabilities," and that the city "continues to work on developing a financial plan to implement an ERP."

He also said the city does ensure that vendors are not delinquent on their taxes when contracts are awarded or renewed, though not every time they receive payments.

Note: An earlier version of this story was published without a response from the Landrieu administration.